Filling the Void: Who's Revitalizing Los Angeles' Big-Box Retail Landscape?

Harbor Freight Tools leased a former 99 Cents Only big-box store in Inglewood.

At K2 Investments, we keep a pulse on every sector of the commercial real estate

market, and the retail segment is undergoing a significant transformation. With legacy

chains scaling back, a new wave of tenants is stepping in to fill vacant big-box spaces

across Los Angeles, reshaping the retail landscape in the process.

Recent market data from CoStar highlights a rise in retail vacancy, particularly for mid-

to big-box formats (10,000-25,000 square feet). This is the highest availability in a

decade, creating both challenges and unique opportunities for landlords and investors.

The good news is that a diverse and dynamic group of new tenants is finding value in

these spaces.

Key Trends in Big-Box Backfill:

• The Rise of "New Experience" Retailers: The days of a single retail type

dominating big-box spaces are over. We're seeing a move towards tenants that

offer an experience beyond just shopping. The most notable example is Round 1

Bowling Arcade, which has taken over the massive 160,000-square-foot

former Sears at Stonewood Center in Downey. This type of tenant draws foot

traffic and provides a major anchor for a shopping center.

• Discount and Specialty Retailers are Expanding: In an era of cautious

consumer spending, value-driven retailers are thriving. Harbor Freight Tools is a

prime example, strategically expanding its footprint and securing a former 99

Cents Only store in Inglewood. Similarly, Boot Barn, a specialty retailer, is

seizing the opportunity to open a new 24,000-square-foot store in Valencia, as

part of a national expansion plan. These chains are actively looking for the kind

of large, visible spaces that have become available.

• Non-Retail Tenants are Stepping Up: The most interesting trend is the influx of

non-traditional tenants into retail properties. The example of Veterinary

Emergency Group moving into a former Old Navy in upscale Beverly Hills is a

perfect case study. This trend reflects how landlords are becoming more creative

with their leasing strategies, recognizing that services like pet care, medical

clinics, and entertainment centers can be excellent drivers of traffic and provide

stable, long-term tenancy.

The Landscape of Opportunity and Challenge

While these new tenants are helping to fill the gaps, challenges remain. The Los

Angeles retail construction pipeline is small, and expanding tenants are often seeking

high-quality, modern locations—which are in short supply. As a result, much of the

available big-box space consists of older, less-desirable properties.

However, this presents a unique opportunity for strategic investors. Properties that may

have been overlooked are now ripe for redevelopment or repositioning to accommodate

these new types of tenants. The key is to identify which properties can be effectively

repurposed to meet the demands of a changing consumer landscape.

At K2 Investments, we believe that understanding these shifts is essential for navigating

the evolving retail market. We help our clients identify properties with the potential to

attract these new, resilient tenants, ensuring that their investments are positioned for

long-term success.